Sun 16 Nov, 2008 01:19 am
It is rather the lack of ethics that brought about the financial meltdown and not greed. Mortgages were peddled with the same fervor as snake oil. They were converted into certificates and sold to other institutions and insurance was taken out on them to transfer risk to the insurance companies. Managers of these firms saw nothing wrong with that action. Lack of Ethics is the problem.
Former Texas Congressman and Senator Phil Gramm with a Ph. D. in Economics, sneaked in a 282 page that deregulated the financial industry in the Glass-Steagall Act. This man taught Economics as a professor at Teaxas A & M University and no sense of shame or ethics. Yeah, the Aggies have an egg on their faces.
The CEO of Lehman Brothers Richard Fuld got $300 million before getting his firm into bankruptcy and on the eve of the bankruptcy gave his senior executives multi-million dollar bonuses. I see the executives having no sense of ethics.
Henry Paulson as head of Goldman Sachs in 2000 wrote a letter to Senate to do away with the Net Capital Rule and let Wall Street Banks use their statistics based risk management software to maintain the level of cash reserves to cover losses. He never even owned up to writing the letter. Instead as Treasury Secretary tried to jerk Congress to give $700 billion to the Wall Street Firms with no strings attached with him on the saddle with complete control playing on fear. I see little or no guilt in his action. He is a psychopath and has no sense of ethics.
Hopefully universities will include ethics in their MBA courses to show that ethics do matter. Lack of it can bring the whole system down in a spectacular manner.
The ill effects from a non-ethical environment produces a criminal like atmosphere. More expenses go to legal advice and protection. Processes are delayed as trust is lacking in all transactions, details and options. Extra expenses are made in finding out the truth and time is money in the business sense. There is excessive caution in all dealings. Alternate routes or Plan Bs are necessary evils.